FIT Not A Good Fit For Aussies

By Robert Tuomi

(WINDSOR, ON) – Remarkable news has reached us from Australia. There the newly-elected Premier of New South Wales (NSW) has kept an election promise – something rarely seen in these parts – and is stomping out his state’s Feed In Tariff (FIT) program which pays a purchase rate well above the market rate to those who use green technologies to generate electricity.

New Liberal Premier, Barry O’Farrell, is tearing up contracts to right the system and bring back more market level rates. A parliamentarian for the riding known as Clarence, Steve Cansdell, claims he has received what he terms as “a stack” of emails from constituents who local newspaper the Daily Examiner claimed were from “people who were upset at the proposed changes.”

Mr. Cansdell is alleged to be understanding of the situation and that “people would be upset that a contract signed is not a contract honoured.”

Notwithstanding, he says his concern is a “fear for the 3.2 million households (not signed up to the Solar Bonus Scheme) in NSW who may be paying for these schemes.”

Newspapers on Monday were screaming out headlines, such as the Daily Examiner’s, which read, “Solar Scheme Stun.”

Mr. O’Farrell’s actions may not be all that stunning. The Daily Examiner reports that the defeated Labour government actually reduced the price offered to new solar producers as recently as last November. It pulled the offered price down to 20 cents a kilowatt from 60 cents but, apparently, kept the 60 cents in place for active projects.

That is now about to change which has produced talk of demonstrations and protests by those who were in the apple cart that Mr. O’Farrell has upset.

The Daily Examiner says it has heard that “Industry and consumer groups are also discussing ‘class actions suits’ over the Government’s reneging on its five-year contracts with the State’s 120,000 photo-voltaic solar producers to pay 60 cents per kilowatt of energy produced. The new proposal, which has not yet passed through Parliament, offers them only 40 cents per kilowatt.”

In Ontario, PC Leader Tim Hudak is campaigning to be the province’s next Premier and hopes for a win akin to Mr. O’Farrell’s. Hudak, promises to do the same thing the New South Wales Premier is doing and end the Trillium province’s FIT program. However, he might not take the same cold turkey approach.

A law firm’s website, Davis.ca, has the lawyers there claiming Mr. Hudak has qualified his promise “by saying his government, if elected, would honour existing FIT contracts.”

The lawyers tell a tale of a politician looking out for families, saying, “in his speech to the Ontario Power Summit, he (Hudak) went on to say, ‘if there is value to Ontario families by stopping some of the larger, more unaffordable projects before they really get started, we won’t hesitate to do that.’ This statement leaves the door open for him to cancel FIT contracts that have not yet received their Notice to Proceed from the OPA.”

According to the lawyers, this currently includes “virtually all of over 1,200 existing FIT contracts. The FIT contract permits such unilateral termination by the government, subject to an obligation to pay very limited damages to the project proponent.”

Prior to the NSW election, Mr. O’Farrell was quite clear that he was not impressed with the former Labour government’s approach to green energy. A poster at a website developed by Simon Wright, known as Whirlpool, claimed to have had contact from him during the campaign in which the Premier to be determined that the then Labour Government’s so-called Solar Bonus Scheme had collapsed.

His comments are nothing if not instructional about what could happen in Ontario, and include the following: “The scheme was designed to cost $202 million but has blown out to more than $2 billion. These costs will have to be met by other electricity users and/or more taxpayer subsidies. This is a major financial disaster for NSW, which is locked in for at least 6 more years.”

He also added, “The Keneally Labor Government’s Solar Bonus Scheme fiasco has caused immense damage to the business and financial platform that is needed to achieve the renewable energy shift in this state. To address the crisis, the NSW Liberals & Nationals have recently held a workshop with solar energy industry stakeholders. We are working closely with industry to determine an interim package of initiatives to enable them to survive the collapse of Solar Bonus. A more detailed replacement for Solar Bonus must be carefully researched and modelled, and it is accepted by all concerned that the resources of government are required to do this work. We do not want to rush out a poorly thought through replacement scheme that creates yet another boom-bust. Nevertheless we are committed to ‘smart’ policies devised with industry that will achieve a renewable energy shift at an affordable priceto consumers.”

What may be even more stunning is that Mr. O’Farrell, a politician, would actually respond to a voter. Good on him.

And while New South Wales gets ready to right its situation, FIT schemes are under attack in other jurisdictions.

Writing in Business Cornwall, a United Kingdom publication, editorial director Nick Eyriey talks of a reduction in the local FIT scheme. He says “the Feed in Tariff (FIT) scheme was introduced last year to encourage development of renewable energy by financially rewarding businesses, communities and individuals for the production of energy from renewable sources. In August the Government announced that local authorities could benefit from the FiT by generating electricity from renewable technologies such as solar powered photo-voltaics (PV) and sell it to the grid in order to support local service activities.

“However, in March the Government announced proposals to limit the FiT for renewable energy schemes of over 50Kw – thereby making large scale schemes no longer financially viable.”

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